The fact that universities are in financial difficulty has been said for quite some time, but if you talk to some in the PBSA world there is an optimism that no university will be allowed to go under and anyway, if one does, it won’t be in the areas they serve. The September 2025 intake would appear to have further emphasised the flight to quality with Russell Group institutions growing market share leaving a number of other institutions in considerable financial difficulty.

The recent merger of the universities of Kent and Greenwich to form the “London and South East University Group” (catchy title isn’t it?), really illustrates the state of the market and surely is a sign of things to come. It has been suggested that this merger is partly born of necessity, and I presume that it is hoped savings will emerge from the sharing of back-office functions, but will that prove possible without substantial initial investment? Will the two separate university brands be maintained, as has been stated, for the long-term? It is clear that universities are having to think radically in relation to the financial issues they face, and the Office for Students has already said that more universities may explore the apparent group “solution”.

I said last month that it was somewhat ironic that at the time of a Labour government in university terms the rich are getting richer, and the poor appear to be getting poorer. The 6% levy on international students seems to me to be yet another policy that reinforces that perception, even if we now know it will be put to good use, supposedly funding means tested grants for UK students studying certain courses that fit with the overall growth agenda. Clearly if you are a working-class student with a love of history you are still expected to fund yourself. For those interested the courses for which students may apply for a grant are in the following disciplines:

• computing

• engineering

• architecture, building and planning, excluding the landscape gardening subgroup

• physics and astronomy

• mathematical sciences

• nursing and midwifery

• allied health

• chemistry

• economics

• health and social care

As is well covered by Vincenzo Raimo in a recent HEPI blog (Weekend Reading: How will universities respond to the 6 per cent international student levy? - HEPI) universities will tackle the levy in a number of ways but “choices will be shaped by their position in the market, their pricing power, and their cost of acquisition (CoA) ie the real cost of recruiting through to enrolment of each international student”. Clearly raising the fee is on the assumption that the market can stand such an increase without impacting on recruitment. Following simple supply and demand laws any fee increase will have a negative impact on student numbers and it is far more likely to be seen on those students who look for a more affordable option both in terms of tuition and living costs so those universities recruiting from Nigeria, India and Bangladesh amongst others are likely to feel the effects of the levy and guess what? I realise I am generalizing here but they tend to be the medium and lower tier universities who are already struggling, whilst the richer Russell Group continue to mainly recruit from China where there is less price sensitivity.

Whilst announcing news of the 6% levy the government, presumably wanting international student growth, also recently declared that it intends to crack down on the number of students in the UK who go on to claim asylum when their visas come to an end, which in the UK in the year to June 2025 was 14,800 people according to the latest available figures from the Home Office. It would be interesting to see at which universities these 14,800 studied and which therefore they may be targeting.

Even when universities seek to be entrepreneurial some run into problems. Newer universities, already hamstrung in international recruitment, perhaps through their lower ranking, have instead shifted towards franchising, whereby they give use of their degree award winning powers to other organisations who pay them for the privilege and provide relevant teaching. The Department for Education have now promised new legislation to tackle the growth in franchising, with Bridget Phillipson writing in the Sunday Times earlier this year “I will also bring forward new legislation at the first available opportunity to ensure the Office for Students has tough new powers to intervene quickly and robustly to protect public money”.

So it would appear that the storm clouds are gathering certainly for some institutions but in terms of PBSA these issues are no different to the obstacles and hurdles that many property sectors face as markets mature. The fundamental model of a residential undergraduate degree does not look like changing and postgraduate qualifications are becoming increasingly important in a tightening labour market and so the base demand for PBSA will remain. There will be greater competition for student tenants, which for some of us is viewed as positive as competition drives standards, innovation and price. In such circumstances the cream tend to rise to the top.

It will take time for answers to all these issues to emerge, but one thing is for sure and to paraphrase Bob Dylan “The Times They Are a-Rapidly Changin”. To stay ahead of the competition and to have a deep dive into these and other issues and opportunities facing the PBSA sector join us at Wembley on December 4th.